Is there a more prestigious position in Australian business life than sitting on the board of the Reserve Bank? It’s a seat at the very top table of economic decision-making, a role that implies importance, prudence and judgement, a position offered by the federal government to very few important people.
Frank Lowy spent 10 years on the Reserve Bank board, from 1995 until 2005. Precisely the period during which we are now told — according to allegations made last week during a US Senate investigations committee hearing — that Lowy and his three sons secretly used a Liechtenstein bank to hide US$68m from tax authorities, possibly Australian tax authorities.
If those Senate allegations prove to be correct (and they are based on stolen documents from inside the bank itself), they again raise uncomfortable questions about the probity of appointing active business operators or extremely wealthy people to the Reserve Bank board. They also raise uncomfortable questions about the process of vetting Board appointees — for example, did Frank Lowy inform the government of his secret Liechtenstein bank accounts before accepting the job? If he didn’t, was he witholding information that, if known, would have ruled him out of the job?
In 2003, then Treasurer Peter Costello warmly announced Lowy’s reappointment to the Reserve Bank board for a third term. Three years earlier, when he was chairman of the OECD, Costello spearheaded a strategy called the Harmful Tax Practice Initiative against tax havens, fighting what he then described as “abuses of financial systems, particularly in relation to bank secrecy laws”.
You don’t have to be smart enough to sit on the Reserve Bank board to realise that something here doesn’t add up.